Hewlett-Packard has agreed to pay US$32.5 million to settle allegations that it overbilled the U.S. Postal Service on a IT hardware contract.

The U.S. Department of Justice had alleged that HP overbilled the Postal Service for a government contract called Acquisition of Desktop Extended Processing Technology (ADEPT) II, which ran between October 2001 and December 2010. HP allegedly failed to comply with pricing terms of the contract that required the company to offer the Postal Service prices that were not higher than offered to HP customers with comparable contracts, the DOJ said in a news release.

The DOJ also alleged that HP misrepresented its prices.

The Postal Service’s Major Fraud Investigations Division (MFID) “fully investigates those contractors who wrongly take advantage of the Postal Service,” Thomas Frost, MFID’s special agent in charge, said in a statement. “The Postal Service and the public must have complete confidence in the procurement process.”

HP looks forward to continuing its work with the Postal Service, a spokeswoman said. “HP is happy to find a mutually acceptable resolution to this matter,” she said by email. “HP values its ongoing relationship with the U.S. Postal Service.”

Compaq Computer, later acquired by HP, won the $2 billion ADEPT II contract in October 2001.